SEC Comment Letter for ALBANY INTERNATIONAL (AIN) — Dec 20, 2016
ALBANY INTERNATIONAL CORP /DE/ (AIN) (CIK 0000819793)
Date: Dec. 20, 2016 · CIK: 0000819793 · Accession: 0000000000-16-105785
AI Filing Summary & Sentiment
Reasoning
Letter
Mail Stop 3561 December 20, 2016 John B. Cozzolino Chief Financial Officer Albany International Corp. 216 Airport Drive Rochester, New Hampshire 03867
Re: Albany International Corp. Form 10-K for the Fiscal Year Ended December 31, 2015 Filed February 26, 2016 File No. 1-10026
Dear Mr. Cozzolino :
We have limited our review of your filing to the financial statements and related disclosures and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten busine ss days b y providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments , we may have additional comments.
Form 10 -K for the Fiscal Year Ended December 31, 2015
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, page 22
1. Given the magnitude of the foreign currency tran slation losses recorded in your other comprehensive income (loss) for the years ended December 31, 2015 and 2014, please provide your investors with more information about these fluctuations in foreign currency translation rates as follows:
We note your s tatement that sales declined due to the broad weakening of foreign currencies against the U.S. dollar. This is a broad statement that could apply to many companies. To make your disclosure more specific to your individual company’s circumstances, please disclose any individual foreign currencies that significantly contributed to the decline in sales and consider discussing in more detail the impact of your operations in these specific currencies on your results. We believe this will
John B. Cozzolino Albany International Corp. December 20, 2016 Page 2
provide your investors with greater insight into the factors impacting your international operations and will allow investors to better anticipate the likelihood that past results are indicative of future results. Refer to ASC 830 -20-50-3.
We note that your analysis of results of operations does not describe the impact of changes in foreign currency translation rates on gross profit. Please explain to us in reasonable detail how you determined no such discussion was needed, including clarif ying to us if your products are generally manufactured in the same country in which they are sold.
We note that the only expenses you describe in your analysis of results of operations as being significantly impacted by foreign currency translation loss es are the Selling, Technical, General and Research expenses. It appears that you are combining two line items from the face of your income statement within this narrative analysis: Technical, Product Engineering, and Research expenses and Selling, General, and Adm inistrative expenses. It also appears from the face of your income statement that Technical, Product Engineering, and Research expenses declined in 2015 significantly more than Selling, General, and Administrative expenses. If certain cost categories are impacted more significantly than others by the change in currency translation rates, please clarify this to your investors. Further, please disclose any individual foreign currencies that significantly contributed to the decline in your expenses and consid er discussing in more detail the impact of your operations in these specific currencies on your results.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
1. Accounting Policies
Inventories, page 53
2. We note you changed the method you utilize to v alue your inventory from average cost to the first -in-first-out method. Tell us the facts and circumstances that caused you to change your inventory valuation method. Further, explain to us why you did not clearly disclose that a change had occurred. Wi th reference to ASC 250 -10-45-2, tell us how you determined this new cost flow assumption was preferable. Lastly, please provide the disclosures required by FASB ASC 250 -10-50 and a preferability letter from your auditor as required by Item 601(b)(18) of Regulation S -K, or advise us why this disclosure and preferability letter are not required.
7. Income Taxes, page 68
3. We note you recorded a worthless stock deduction in the fourth quarter of fiscal 2015. Please explain to us the circumstances leading to this deduction. We note from your disclosure on page 93 this deduction relates to the Company’s investment in a German
John B. Cozzolino Albany International Corp. December 20, 2016 Page 3
subsidiary. Further, we have read your disclosure on page 25 which indicates your decision to discontinue manufacturing operations a t the German facility in the second quarter of fiscal 2015. Explain to us your accounting basis for this deduction and why you did not record the tax benefit of the deduction in an earlier period, such as when you made the decision to cease operations at the manufacturing facility in the second quarter of fiscal 2015.
We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by th e staff.
You may contact Robert Babula, Staff Accountant at (202) 551 -3339 or me at (202) 551 - 3737 with any questions.
Sincerely,
/s/ Jennifer Thompson
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Mail Stop 3561 December 20, 2016 John B. Cozzolino Chief Financial Officer Albany International Corp. 216 Airport Drive Rochester, New Hampshire 03867 Re: Albany International Corp. Form 10-K for the Fiscal Year Ended December 31, 2015 Filed February 26, 2016 File No. 1-10026 Dear Mr. Cozzolino : We have limited our review of your filing to the financial statements and related disclosures and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten busine ss days b y providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments , we may have additional comments. Form 10 -K for the Fiscal Year Ended December 31, 2015 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, page 22 1. Given the magnitude of the foreign currency tran slation losses recorded in your other comprehensive income (loss) for the years ended December 31, 2015 and 2014, please provide your investors with more information about these fluctuations in foreign currency translation rates as follows: We note your s tatement that sales declined due to the broad weakening of foreign currencies against the U.S. dollar. This is a broad statement that could apply to many companies. To make your disclosure more specific to your individual company’s circumstances, please disclose any individual foreign currencies that significantly contributed to the decline in sales and consider discussing in more detail the impact of your operations in these specific currencies on your results. We believe this will John B. Cozzolino Albany International Corp. December 20, 2016 Page 2 provide your investors with greater insight into the factors impacting your international operations and will allow investors to better anticipate the likelihood that past results are indicative of future results. Refer to ASC 830 -20-50-3. We note that your analysis of results of operations does not describe the impact of changes in foreign currency translation rates on gross profit. Please explain to us in reasonable detail how you determined no such discussion was needed, including clarif ying to us if your products are generally manufactured in the same country in which they are sold. We note that the only expenses you describe in your analysis of results of operations as being significantly impacted by foreign currency translation loss es are the Selling, Technical, General and Research expenses. It appears that you are combining two line items from the face of your income statement within this narrative analysis: Technical, Product Engineering, and Research expenses and Selling, General, and Adm inistrative expenses. It also appears from the face of your income statement that Technical, Product Engineering, and Research expenses declined in 2015 significantly more than Selling, General, and Administrative expenses. If certain cost categories are impacted more significantly than others by the change in currency translation rates, please clarify this to your investors. Further, please disclose any individual foreign currencies that significantly contributed to the decline in your expenses and consid er discussing in more detail the impact of your operations in these specific currencies on your results. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 1. Accounting Policies Inventories, page 53 2. We note you changed the method you utilize to v alue your inventory from average cost to the first -in-first-out method. Tell us the facts and circumstances that caused you to change your inventory valuation method. Further, explain to us why you did not clearly disclose that a change had occurred. Wi th reference to ASC 250 -10-45-2, tell us how you determined this new cost flow assumption was preferable. Lastly, please provide the disclosures required by FASB ASC 250 -10-50 and a preferability letter from your auditor as required by Item 601(b)(18) of Regulation S -K, or advise us why this disclosure and preferability letter are not required. 7. Income Taxes, page 68 3. We note you recorded a worthless stock deduction in the fourth quarter of fiscal 2015. Please explain to us the circumstances leading to this deduction. We note from your disclosure on page 93 this deduction relates to the Company’s investment in a German John B. Cozzolino Albany International Corp. December 20, 2016 Page 3 subsidiary. Further, we have read your disclosure on page 25 which indicates your decision to discontinue manufacturing operations a t the German facility in the second quarter of fiscal 2015. Explain to us your accounting basis for this deduction and why you did not record the tax benefit of the deduction in an earlier period, such as when you made the decision to cease operations at the manufacturing facility in the second quarter of fiscal 2015. We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by th e staff. You may contact Robert Babula, Staff Accountant at (202) 551 -3339 or me at (202) 551 - 3737 with any questions. Sincerely, /s/ Jennifer Thompson Jennifer Thompson Accounting Branch Chief Office of Consumer Products